Hopefully the will leave the euro before it is too late, and hopefully it is not too late

That would solve a lot of problems, with Turkey for example, anyway there no money for bailouts. They will have to find it elsewhere._________________Truck!!
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What I cannot understand is how anybody thought that making another echelon of bureaucracy that has a higher priority over your own control was a good idea. It's an Orwellian wet dream come true._________________"Giving money and power to government is like giving whiskey and car keys to teenage boys." - P. J. O'Rourke

What I cannot understand is how anybody thought that making another echelon of bureaucracy that has a higher priority over your own control was a good idea. It's an Orwellian wet dream come true.

The problem is not bureaucracy is the human nature, to steal is easier than to work. If a country where a primary school teacher earns 3500€/m asks 10bn € of help to another country where a primary school teacher earns 1000€/m they are fucking thieves. If a country has a 10% corporate tax and steals money from neighboring countries attracting tax-dodgers and than asks 10bn € to the countries they are already robbing it is a country of thieves.
If the Spaniards, which WILL contribute to the bailout, think this is OK it means they are just stupids and deserve to bankrupt._________________Truck!!
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What I cannot understand is how anybody thought that making another echelon of bureaucracy that has a higher priority over your own control was a good idea. It's an Orwellian wet dream come true.

The problem is not bureaucracy is the human nature, to steal is easier than to work.

Knowing human nature, as humans should, the desire to try and go against it because of a childlike dream of utopia is simply stupid. The problem is bureaucracy, as it tries to pretend that humans are not what they are.

The EU was a mistake from the get go, much like the USSR._________________"Giving money and power to government is like giving whiskey and car keys to teenage boys." - P. J. O'Rourke

Knowing human nature, as humans should, the desire to try and go against it because of a childlike dream of utopia is simply stupid. The problem is bureaucracy, as it tries to pretend that humans are not what they are.

The EU was a mistake from the get go, much like the USSR.

We'll see. For the immediate rogue countries are the problem, money is tight and nobody will accept wasting it.

There is a fundamental difference between the EU and the USSR, the free will. Most of the Soviets were countries already subjected to the military rule of the Russian Empire and were subjected to the military rule of the Russian communists, most of the other countries of the Warsaw pact were under the military occupation of the Red Army. The USSR was the result of war and kept united by the military.

Different thing is the EU, and different will be its fate.

Cyprus is free to do whatever they want, as long as they don't damage the fellow EUian AND don't ask for money._________________Truck!!
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Tell that to Ireland. They voted no, and the EU rejected that vote and forced another._________________"Giving money and power to government is like giving whiskey and car keys to teenage boys." - P. J. O'Rourke

Tell that to Ireland. They voted no, and the EU rejected that vote and forced another.

The EU? Their government, they can leave whenever they want (and pay their debt in Euro).
We are all waiting the moment when they ask for money again _________________Truck!!
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Bullshit, devaluation is devaluation no matter where you live, oil prices are going to increase just like the price of every imported good. If an eurozone country really wants that it is not a problem, just tax everything there, same effect but localized.

How does that make sense? If the lira drops, italian exports are cheaper for other countries.

Tell that to Ireland. They voted no, and the EU rejected that vote and forced another.

I actually think this is a huge part of the problem. If you ask me, the EU lacks a lot of legitimacy. The ireland issue was telltale. If voters don't give the right answer, keep asking them until they do. Transparency is another issue (or should I say opacity).

Print money = devalue the currency = the purchasing power of all bank accounts through the EU will be reduced

Tax all bank accounts in a trouble country = the purchasing power will be reduced only in the bank accounts of the troubled country

Isn't it fairer that way? The money could be used for example to pay useless airports ....

So it's about fairness, now? You know what would be fair? That those that have made horrible "investments", such as the German or French banks, lose their money. Or that those countries that have subverted the Euro and the ECB to their sole profit, and that have reaped the benefits for a decade, like Germany, pay the costs.

I don't have any money in the bankrupt banks and I never "invest" in (foreign or domestic) public debt, yet you think that it would be fair to steal my money. Nice.

erm67 wrote:

As I said it was done in Italy in 1992, (only 0.6%) as an alternative to devaluation, and it worked, the shock and subsequent scare convinced most people to invest their money instead of letting it inactive on bank accounts fearing losses. The effect on the economy was good and led to a boom in investments and GDP growth.

A 0.6% hurts, a 10% is a major bitch. Also, sorry but your argument that theft is good for economy is laughable, not to mention that anyone who has the slightest idea on how banks work knows that money never stays still in a bank account. Actually, that is the source of a large part of our current problems.

erm67 wrote:

Rich right wing aka Berlusconi sitting on piles of inactive money are still scared to this day of the possibility and no-one has money sleeping in bank accounts.
I think the Cyprus move is meant more to scare the rest of the EU. We need growth, so get out the money and invest in something

Oh, it has scared half of the EU, for sure. It will also scare the other half, when German tourists and expatriates start being assaulted, robbed, and murdered all over southern europe.

You people seriously understimate how hot the situation is.

erm67 wrote:

Spain is not going anywhere for the next 20 years, you really think it will take less time time to recover from a housing bubble like that outside the euro?

1) The euro and the ECB policies are the main causes of the housing bubble.
2) Spain is not going anywhere, but neither is Europe. There are huge structural problems in the Union that nobody wants to tackle and the greatest of them is the legitimacy of the Eurocrats._________________"Freedom incurs responsibility; that is why so many men fear it." - George Bernard Shaw

So it's about fairness, now? You know what would be fair? That those that have made horrible "investments", such as the German or French banks, lose their money. Or that those countries that have subverted the Euro and the ECB to their sole profit, and that have reaped the benefits for a decade, like Germany, pay the costs.

I don't have any money in the bankrupt banks and I never "invest" in (foreign or domestic) public debt, yet you think that it would be fair to steal my money. Nice.

1st) If Germany and France were the only contributors to the 'EU money' it would be fine but Italy contributes 24% of it, and it is the 3rd year in a row that our balance is positive not counting the money contributed to the bailouts.

2nd) A Spanish worker earned less than an Italian one in 2005 but in just 5 years wages increased of more than 26% and now a Spanish worker earn more than an Italian one (well the few left). This is fine until the workers that did not enjoyed such high wages are asked to give some of their taxes to the ones that earn more because they are bankrupt but still wants to earn more.

3rd) The lowest point is reached when a bankrupt country with overpaid workers threatens consequences if the countries that still are able to produce do not devalue their currency (and their purchasing power) to help their worker to keep the high wages.

4th) Currently a Northern Italian worker earns 10% less than a German one while a Southern Italian one earn less than a Greek one, why should we give money to the the Greeks and not to Southern Italians? This is going to become a big problem in the next future.

Amaranatha wrote:

A 0.6% hurts, a 10% is a major bitch. Also, sorry but your argument that theft is good for economy is laughable, not to mention that anyone who has the slightest idea on how banks work knows that money never stays still in a bank account. Actually, that is the source of a large part of our current problems.

Actually it was the Cypriote premier that proposed a 9.9 levy to find the 5bn € that the troika was not willing to give to Cyprus.
The money doesn't stay still in the account it is invested by the banks in complex financial operations which are reinvested as derivatives, which ......
That is the point, instead if the money is invested directly by the owner, MAYBE, it is invested in something more physical and actually useful to the economy. My point was, a one off levy like that cannot be excluded a priori, and at least something painful like that attempted BEFORE asking for bailout money.

Amaranatha wrote:

Oh, it has scared half of the EU, for sure. It will also scare the other half, when German tourists and expatriates start being assaulted, robbed, and murdered all over southern europe.

You people seriously understimate how hot the situation is.

Most of my German friends that had moved to Mallorca returned to Germany some years ago already because life had become impossible there for them. Not a big deal, they were actually paying taxes and contributing money to the economy, now they pay again taxes in Germany. Merkel is very likely scared to death already

Amaranatha wrote:

1) The euro and the ECB policies are the main causes of the housing bubble.

Can you explain me how did the ECB policies cause a housing bubble in Spain and Ireland but not elsewhere?
It was the ECB policies that forces bankrupt Spain to pay those high wages to public sector workers?

Amaranatha wrote:

2) Spain is not going anywhere, but neither is Europe. There are huge structural problems in the Union that nobody wants to tackle and the greatest of them is the legitimacy of the Eurocrats.

Yes time is running out it is time to give the eurocrats more power or dissolve the union. I remember you were advocating a banking union some time ago, what about the recent proposal? The ECB is given the power to supervise and eventually dissolve a bank if it is not acting correctly, or you just want a banking union where the ECB gives money to whatever banks asks for it without questions?

BTW recently there are a lot of Spaniards full of money that opens exclusive bars and restaurants in Italy, they are of course welcome but shouldn't the Spanish government try to keep them at home and let them invest their money in Spain? Or they are just leaving the sinking ship?_________________Truck!!
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Can you explain me how did the ECB policies cause a housing bubble in Spain and Ireland but not elsewhere?
It was the ECB policies that forces bankrupt Spain to pay those high wages to public sector workers?

Bubbles are not uniformly created across entire currency. Take the UK or the US. A bubble popped in a number of areas in the US and UK, but not every area. In London, prices only paused in their climb, but never came down. Similarly for parts of the US. In contrast, Northern Ireland has last close to 50% of its home values.

Can you explain me how did the ECB policies cause a housing bubble in Spain and Ireland but not elsewhere?
It was the ECB policies that forces bankrupt Spain to pay those high wages to public sector workers?

Bubbles are not uniformly created across entire currency. Take the UK or the US. A bubble popped in a number of areas in the US and UK, but not every area. In London, prices only paused in their climb, but never came down. Similarly for parts of the US. In contrast, Northern Ireland has last close to 50% of its home values.

Probably housing bubbles in the UK and US where not caused by the FED or BOE monetary policy....

Usually housing bubble are the consequence of rapid, short-term increases in cash availability followed by a rapid disappearance of the cash source ........ in fact London is not a housing bubble, yet

Some time ago I was reading an interview with an old Spanish miner, he told about the terrible conditions of miners at the beginning of the century that lead to the revolts and civil war against the Nacionales, despite that they kept working, even after the backlash of the Francoist repression the mines were still a source of income, things improved in the post- dictatorship Spain, the union obtained always better condition for the miners, increases in pay, welfare, health care, they finally got the right to a pension at young age, necessary because it is a physically challenging work that causes early aging. Spanish mines were working at full capacity and miner were the envy of the rest of Europe, miners from Poland and east Europe were coming to work there and really appreciated all the benefits. Once poor miners bought wonderful houses and were working and living happily. But suddenly the mines closed, it was no longer economical to extract ores there, most of them live on the dole now and the mines that for so much time gave work to everybody are now closed.

End of the parable.

Now did the mines close because of the ECB policy and therefore Italian, French and German worker must give some money to Spain in order to keep the miners on the dole indefinitely?
Or should the entire eurozone devalue its currency until the pay of Spanish miners is back to levels that make economically profitable to reopen the mines?

I guess there is a third option available......_________________Truck!!
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Can you explain me how did the ECB policies cause a housing bubble in Spain and Ireland but not elsewhere?
It was the ECB policies that forces bankrupt Spain to pay those high wages to public sector workers?

Bubbles are not uniformly created across entire currency. Take the UK or the US. A bubble popped in a number of areas in the US and UK, but not every area. In London, prices only paused in their climb, but never came down. Similarly for parts of the US. In contrast, Northern Ireland has last close to 50% of its home values.

Probably housing bubbles in the UK and US where not caused by the FED or BOE monetary policy....

Usually housing bubble are the consequence of rapid, short-term increases in cash availability followed by a rapid disappearance of the cash source ........

What?!_________________The popularity of Bernie Sanders tells me there is a large group of people in this country who want to do what is right, what is moral, and what is virtuous -- and yet have no idea how.

Can you explain me how did the ECB policies cause a housing bubble in Spain and Ireland but not elsewhere?
It was the ECB policies that forces bankrupt Spain to pay those high wages to public sector workers?

Bubbles are not uniformly created across entire currency. Take the UK or the US. A bubble popped in a number of areas in the US and UK, but not every area. In London, prices only paused in their climb, but never came down. Similarly for parts of the US. In contrast, Northern Ireland has last close to 50% of its home values.

Probably housing bubbles in the UK and US where not caused by the FED or BOE monetary policy....

Usually housing bubble are the consequence of rapid, short-term increases in cash availability followed by a rapid disappearance of the cash source ........

1st) If Germany and France were the only contributors to the 'EU money' it would be fine but Italy contributes 24% of it, and it is the 3rd year in a row that our balance is positive not counting the money contributed to the bailouts.

So, like everyone else you just don't want to suffer the consequences of the crisis. Understandable, but hardly a superior moral position.

As far as I can see, your point is that if the banking system of country X is bankrupt, the citizens of country X are somehow responsible for it and must pay. OK, substitute X for "Europe Union" and you have your own argument applied against you. After all, what did you do to avoid arriving at the current situation?

Let the banks fail and let the governments fail and let's forget all this bailout nonsense. Yes, it will propagate (inside and outside the EU). Yes, it will hurt. A lot. But we will recover. And we will have an enormous incentive to do things properly next time, i.e., stop using debt as a way to finance governments (#1 problem in the Western world).

When I say that we have to print money, I don't mean using it to save banks. I mean that it must be used to rescue the people that will be inexorably affected.

erm67 wrote:

2nd) A Spanish worker earned less than an Italian one in 2005 but in just 5 years wages increased of more than 26% and now a Spanish worker earn more than an Italian one (well the few left). This is fine until the workers that did not enjoyed such high wages are asked to give some of their taxes to the ones that earn more because they are bankrupt but still wants to earn more.

Misguided envy if I ever saw one. Want to switch places? I'd love to.

Most wages here are low. Maybe you are thinking of public sector wages, which are higher (they are decreasing, though).

erm67 wrote:

3rd) The lowest point is reached when a bankrupt country with overpaid workers threatens consequences if the countries that still are able to produce do not devalue their currency (and their purchasing power) to help their worker to keep the high wages.

All this euro crisis was never about wages. It was about banks not wanting to pay the risk of their bad investments and using their governments to turn this into a national power struggle.

Stop using debt as government income and the problem will be resolved at the national level (because without debt, spending cannot surpass income).

erm67 wrote:

4th) Currently a Northern Italian worker earns 10% less than a German one while a Southern Italian one earn less than a Greek one, why should we give money to the the Greeks and not to Southern Italians? This is going to become a big problem in the next future.

You've just stated another of the largest problems of the EU: primacy of national interests over union interests.

erm67 wrote:

Actually it was the Cypriote premier that proposed a 9.9 levy to find the 5bn € that the troika was not willing to give to Cyprus.

If that is so, ask yourself why is the EU against finding alternatives? (at least, they were until the Russians started with the menacing phone calls).

erm67 wrote:

The money doesn't stay still in the account it is invested by the banks in complex financial operations which are reinvested as derivatives, which ......
That is the point, instead if the money is invested directly by the owner, MAYBE, it is invested in something more physical and actually useful to the economy. My point was, a one off levy like that cannot be excluded a priori, and at least something painful like that attempted BEFORE asking for bailout money.

Complex financial operations? Not at all. Fractional reserve banking is a very simple to understand concept (also, a powder keg). Derivatives are financial instruments that are not directly related to fractional reserve banking. I dislike both, btw.

Anyway, fractional reserve already provides want you want.

erm67 wrote:

Can you explain me how did the ECB policies cause a housing bubble in Spain and Ireland but not elsewhere?

Of course. But it would take too long.

Long story short, the ECB policies made cheap credit available--as needed by Germany--and my co-citizens (and many foreigners) used it to buy homes (housing, and even land ownership, has always been a problem in Spain; maybe that's the cause you're looking for). Since land supply was constrained, prices rised. This made them look like good investments, so why not spend just a bit more? After all, credit is cheap! And you could easily get a job in the construction industry, because every one wanted to own a house.

erm67 wrote:

It was the ECB policies that forces bankrupt Spain to pay those high wages to public sector workers?

No, the unions did. But we could pay them back then (By European standards, Spain had a very low debt when the crisis started).

erm67 wrote:

Yes time is running out it is time to give the eurocrats more power or dissolve the union. I remember you were advocating a banking union some time ago, what about the recent proposal? The ECB is given the power to supervise and eventually dissolve a bank if it is not acting correctly, or you just want a banking union where the ECB gives money to whatever banks asks for it without questions?

I want an union where debt is not used to finance governments. I want a banking union where Germany is not exempted from compliance. I want to see bad banks fail. I want to put some order in the fractional reserve system. And I want our politicians to learn proper math. That will do for a start.

erm67 wrote:

BTW recently there are a lot of Spaniards full of money that opens exclusive bars and restaurants in Italy, they are of course welcome but shouldn't the Spanish government try to keep them at home and let them invest their money in Spain? Or they are just leaving the sinking ship?

Probably the second, but why should they priorize Spain over the rest of Europe? Aren't we all happy European citizens? _________________"Freedom incurs responsibility; that is why so many men fear it." - George Bernard Shaw

I have written years ago in this forum that the only solution to solve the so-called financial crises is to put an end of all government debt. Zero new indebtedness. Glad to see that at least one person agrees (from Spain, of course). Prohibition of all government debt will also reduce corruption among government officials.

1st) If Germany and France were the only contributors to the 'EU money' it would be fine but Italy contributes 24% of it, and it is the 3rd year in a row that our balance is positive not counting the money contributed to the bailouts.

So, like everyone else you just don't want to suffer the consequences of the crisis. Understandable, but hardly a superior moral position.

Your crisis, that you caused in Spain with your poor government policies. You caused the spanish housing bubble, your crazy wage increases (30% in 5 years, with 2% inflation) closed the factories, your bloated welfare system, pension system, overpaid public sector workers did the rest to default the country.
The worst is that after hearing for several years how superior was the Spanish system, you are broke, because of your mistakes and handling of the first phases of the credit crunch, but in your opinion the BCE is responsible of your problems, the bailout is just money you deserve because of all the torts the EU has done to Spain.
I have never heard a Spaniard say we are broke because we mismanaged our country, left and right in turns mismanaged the economy, the welfare, working policies and social policies. Now we are broke, thank you for giving us some help.
My moral position is that we (as Italy) are not broke (yet) and we are not going to default any time soon, but we are not broke because we did not enjoy the happy spending times like you did, and because the ECB and EU were for us the right environment, the euro works for us just like the common market, it is just not enough, more integration is needed to improve things.
Going broke for your mistakes and attack the system sometimes cause the system to hate you.

I need some time for a full answer to the rest of the post, to busy at the moment_________________Truck!!
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Prohibition of all government debt will also reduce corruption among government officials.

And make the welfare state impossible.

Pretty much. Hard to bribe people with welfare unless they're given the option to sell the labor of their children and their children's children. If the people were forced to bear the cost of the policies they support, politicians wouldn't find any political value in selling off children to the state.

The same goes with war. Imagine if people were handed bills for the Iraq and Afghanistan wars as the costs piled up. The wars would be over in weeks, maybe a month max.

A much more efficient solution is called freedom._________________The popularity of Bernie Sanders tells me there is a large group of people in this country who want to do what is right, what is moral, and what is virtuous -- and yet have no idea how.

Prohibition of all government debt will also reduce corruption among government officials.

And make the welfare state impossible.

Pretty much. Hard to bribe people with welfare unless they're given the option to sell the labor of their children and their children's children. If the people were forced to bear the cost of the policies they support, politicians wouldn't find any political value in selling off children to the state.

That is equivalent to a justification of the haircuts to bank accounts in Cyprus. Welfare is needed, because help those in need is "the right thing to do ®", but when 50% of the population lives on the dole because they elect who promises them more welfare (or wage rises) than it becomes a problem._________________Truck!!
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